Kyrgyzstan is among the poorest of the post-Soviet countries. Although coal, gold, mercury, and uranium deposits are considerable, the country boasts few of the oil and gas reserves that promise a badly needed economic windfall to other Central Asian republics.
Under the presidency of Askar Akayev, the process for economic restructuring toward a free market orientation outpaced that of most other post-Soviet republics, yet the transition has been an extremely difficult one. Dissolution of the state ordering system in Kyrgyzstan and its reduction in other post-Soviet republics have disrupted the traditional supply channels and effective markets for the country's industries, severely affecting overall economic performance.
As of 1995, 59.5% of enterprises had been privatized or converted to joint stock companies; privatized firms accounted for more than half the GDP that year. Some 50% of industrial firms, 75% of agriculture, and 90% of retail trade were privatized by 1995. By 1999, most of the state-owned enterprises had been sold.
The Kyrgyz government instituted tight monetary and fiscal policies in 1994 that reduced inflation from 23% per month in 1993 to 5.4% in 1994 and further, to 2.3% in 1995. Inflation was up again to 18% in 1998. Gross domestic product grew by an average annual rate of 7% from 1987 to 1998, with a 1998 growth rate of 1.8%.
A reform of the government structure in early 1992 consolidated 41 ministries into 13 ministries and 7 commissions. As part of this change, the Ministry of Economy and Finance was established to assume the fiscal and economic planning duties previously carried out separately by the Ministry of Finance and the State Planning Committee. In May 1993, Kyrgyzstan was the first country of the CIS countries to announce the introduction of its own currency, the som. Although taken in order to stabilize the national economy in face of continuing turmoil in the ruble zone, this step posed a large setback to previous negotiations for a single monetary union with other post-Soviet republics. The som has been remarkably stable since 1994, and is considered the most stable currency in central Asia, although the government still faces excessive debt.